Steve Allen. Source: dnata
The cargo handling market will continue to face volatile airline schedules, problems with recruiting enough staff and having to handle cargo-in-the-cabin flights for the immediate future, according to executives at ground handler dnata.
Speaking at an event to highlight its latest expansion at Heathrow Airport, dnata chief executive Steve Allen said that the recent lockdowns imposed in China showed that Covid would continue to impact airlines’ operations and extend the use of cargo-in-the-cabin, while the conflict in Ukraine has added to geopolitical uncertainty.
“I think it will be two years before the industry starts to settle down to a normal type of operation and ways of working because there is so much volatility and the geopolitical impact of what is happening in the Ukraine at the moment will have quite wide reaching implications,” he said.
“China is saying they aren’t going to open to passenger operations until 2024, so I think we still have another couple of years of volatility to manage.”
That said, Allen did expect to see some improvement in the passenger side of the business in the summer season – starting March 28 – as many governments have laid out their plans for travel.
Cargo flights would remain likely to be subject to last minute changes, he said, as the amount of available slots at airports meant airlines would alter departures to make sure aircraft are fully utilised.
“We are going through an unpredictable phase,” said Allen. “We are seeing inconsistent recovery from the pandemic and it is very difficult for us to plan and optimise our business when countries are opening and closing borders and growth is happening at different rates throughout the world.
“The geopolitical instability and what is going on in Ukraine and Russia at the moment could have some major ramifications for both today and the future in terms of how Russia gets positioned in the world economy and we are watching that very closely.
“We were just getting over covid and now we have this new challenge coming our way.”
Alex Doisneau, managing director of dnata UK and Mohammed Akhlaq, chief commercial officer of dnata UK, highlighted how constantly changing schedules from airlines had made it difficult to pre-plan labour deployment.
Doisneau said that they could have three flights one day, none the next, or two cargo-in-the-cabin flights one week and then 20 the next week.
“The real challenge is the lack of scheduled stability,” she said. “One minute we have a normal week and then there are cancellations for two weeks. We can’t just have people on the side waiting.”
Akhlaq added that the industry had been in a seasonal quiet period over the last couple of months but would soon start picking up again.
The grounding of Russian-operated freighters due to sanctions would also hit the market, he said.
“We had one airline telling us it was going back to 17 flights per week and then by Monday it was back down to 12 a week,” said Akhlaq.
“It is a huge thing – at one point we are ramping up on a Friday afternoon and then by Monday evening we were ramping back down again.”
All three praised dnata staff for being flexible, with some temporarily transferring over from the passenger and ramp side of the business to help meet the cargo demand – something that has been particularly important with the labour intensive cargo-in-the-cabin operations.
But Doisneau added that with the passenger side of the business gradually coming back online, managing the cargo-in-the-cabin flights was becoming harder as it was more of a challenge to call on labour from elsewhere in the business.
“I don’t think cargo in the cabin is going to go away with what the capacity demands may be over the next six months,” added Akhlaq. “We all thought it was a short-term development but looking at what is going on around the world, I think they are here to stay for a while.”
China-based airlines had been due to end cargo-in-the-cabin flights at the start of the year in line with regulatory rule changes, but it now appears this deadline has been pushed back.
Allen said that another way the company had managed the situation was forming closer working relationships with their airline customers.
“Our relationships with customers has been closer than it has ever been,” he said.
“We solved problems together rather than looking it at a purely customer-supplier relationship.
“I think that will continue because this labour shortage is going to mean we are going to have to work together to maximise the capacity as well as having to have some flexibility to cope with a shortage of labour.”
Allen said that labour would be the biggest challenge faced by the handling industry over the next 12 months.
The handler reduced staff numbers from 45,000 pre-pandemic to around 34,000 today as it faced an 80% reduction in its travel and catering businesses, while handling was down by around 40%.
However, now it is now looking to rebuild.
“The length of the pandemic has meant that many people left the industry and found other jobs and trying to attract them back is tricky,” Allen said.
“But also the working population has shrunk as people have taken early retirement, moved onto other jobs and also migration has been affected significantly.
“Does that mean you have to pay people more to come back into the industry? I think that is the case around the world and not just the airline industry.
“But we also work very hard on being an employer of choice, so that people come to work for us because they want to go to an employer that they can trust and is a fun and exciting place to work, with development opportunities and career progression and all of those good things.
“We believe that we can compete with companies around the world that are trying to attract the same types of people.
“We have a diverse portfolio so it’s not just cargo or ground handling from a career point of view. It is also a global business so you can move around.”